This is a time of year normally reserved for looking forward. Yet many on Wall Street are looking back — to make sure the door is slammed tight on 2021.
Certainly the year brought some things that will long be remembered with fondness, like the S&P 500 Index’s robust 27% yearly gain. But the last 12 months also brought fresh horrors from Covid variants, raging inflation, crazed campaigns to pump up throwback stocks and nonstop talk of cryptocurrencies.
“2021 was a testament to economic resilience, especially when turbocharged by monetary and fiscal stimulus — those combined to make a very potent cocktail for investors,” said Steve Sosnick, chief strategist at Interactive Brokers. But all this happened “in the face of a long list of tribulations.”
Here are things that tormented traders and analysts in 2021:
What Your Peers Are Reading
Just Go, Covid
Jim Paulsen, chief market strategist at the Leuthold Group, hopes the omicron variant will prove to be less severe than prior strains. When the global suffering begins to subside, he looks forward to being relieved of a far smaller burden: being an armchair virologist.
“I’ll be super glad when I no longer hold myself out as a virus expert. Which I’ve never been, but I play one on TV,” Paulsen said. “It’s kind of ridiculous to have all these investment types pontificating about the virus. I’ve done it a lot and I’m tired of doing it.”
Megan Horneman, director of portfolio strategy at Verdence Capital Advisors LLC, is ready for lockdown market volatility to be over, particularly in Europe where equity indexes have slumped in countries with strict rules.
And everyone has felt the weight of constantly grappling with the human tragedy.
“We’d love to no longer have to look at statistics like daily death rates and kind of view those as dispassionately as an investment metric,” said Giorgio Caputo, senior portfolio manager at J O Hambro Capital Management.
Beat It, Base Effects
Economic data faced massive “base effects” in 2021, where year-over-year increases for inflation and other metrics appeared large in comparison to the weak prints in 2020, at the beginning of the pandemic.
“2021 was a year of no comparisons. You couldn’t compare the data because of the pandemic and the abnormality of markets,” said Chris Gaffney, president of world markets at TIAA Bank, who is looking forward to leaving base effects behind.
Whether or not inflation will be able to ease in 2022, Wall Street grew weary of hearing it referred to as “transitory.” Officials at S&P 500 companies mentioned the word 334 times this year on investor calls, according to a Bloomberg analysis of the transcripts.
Even Federal Reserve Chair Jerome Powell, who first brought the phrase to prominence, declared in November that it was “probably a good time to retire that word.”